Indian health board settles fraud suit

Published 6:59 pm, Thursday, May 2, 2013

A nonprofit company that received federal funding for drug and alcohol treatment of thousands of American Indians in rural Northern California will forfeit $5.1 million and give up two years of eligibility to settle a government fraud suit, the U.S. attorney's office in San Francisco announced.

Federal authorities accused the California Rural Indian Health Board in July of trying to inflate its client base by directing funds to payments for housing, auto repairs and other expenses unrelated to treatment.

The suit also alleged that the company eliminated the legally required screening of all clients for drug and alcohol abuse and, as a result, distributed some of the funds to tribal members who did not need treatment. Rather than handing out vouchers that could be used only for treatment programs, the company arranged the delivery of unrestricted gift cards, the suit said.

The Rural Indian Health Board denied the allegations and did not admit any wrongdoing in the settlement, which was made public this week. The board did not respond to a request for comment.

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"This settlement is a victory for all (access to recovery) clients who need substance and alcohol abuse treatment and recovery support" by making sure that the federal funds are used for their intended purpose, U.S. Attorney Melinda Haag said in a statement.

Haag's office said the nonprofit's financial penalties would not deprive tribal members of treatment, but did not elaborate.

The nonprofit, based in Sacramento, was awarded a three-year, $17.1 million grant by the Department of Health and Human Services in 2004 to provide treatment and recovery services for 6,700 Indians in rural counties through tribal and private health care providers.

The suit, filed in San Francisco, alleged that the company had trouble enrolling the required number of clients and decided to ignore the rules.

The nonprofit told providers not to screen applicants for drug or alcohol use and, once clients were enrolled, directed payment to their mortgages, rent, utilities, car repairs, clothing, court fines and personal expenses, the suit said.

The settlement requires the company to return $532,000 from a previous grant, give up $4.6 million it was entitled to receive from a current federal grant, and refrain from reapplying to the program for two years.